Tuesday, February 13, 2007

Significance of this Research

Entrepreneurship is currently undergoing a fundamental transformation that reflects the rapid and radical changes that are affecting the global market place. The emergence of the Internet and developments in Information and Communication Technologies (ICTs) have opened new markets and considerably altered existing ones (Brynjolfsson and Kahin 2002). From an entrepreneurship perspective, the full economic impact of the Internet and related ICT is yet to be fully understood or empirically tested (Martin and Matlay 2003). Nevertheless, it is increasingly obvious that a shift in entrepreneurial equilibrium is taking place (Matlay and Addis 2003). Although some of the traditional entrepreneurial concepts still apply, much of the context in which related activities are taking place has changed dramatically over a relatively short period of time (Matlay 2003b). Consequently, and in order to capture the economic value that is created within rapidly evolving e-Markets, a new and highly adaptable brand of e-Entrepreneurs has emerged (Matlay 2003a).

Afuah and Tucci (2003) recommend that all organisations that are affected by the Internet should have a dedicated “business model”. The authors justify their suggestion by pointing at the complexity, speed and uncertainty of Internet trading. Matlay (2004) agrees with this advice. An effective business model often depends upon organisational aims, human and physical resources as well as market orientations. Bakker (2005) does the simple observation that an increasing number of people are not only using the Internet, but who are relying on the Internet for social contacts, purchasing goods and being informed on what is happening in the world. The Internet is becoming a significant factor in today's society.

Because the internet has become mature and new simple techniques make it possible for everyone to use the internet new aspects of e-Business and e-Entrepreneurship become more important. Although much has been written about these developments, scientifically research about the underlying value drivers of this next stage is missing. This research attempts to fill this theoretical gap by seeking to identify the (most important) value drivers, features and underlying business models in Web 2.0.

In Gartner’s 2006 Emerging Technologies Hype Cycle (Appendix 2, figure 3), which assesses the maturity, impact and adoption speed of 36 key technologies and trends during the next ten years, three major themes that are experiencing significant activity and which include new or heavily hyped technologies, where organisations may be uncertain as to which will have most impact on their business, are argued. One of the three key technology themes identified by Gartner, and the corresponding technologies for enterprises to examine closely within them, is Web 2.0 and represents a broad collection of recent trends in Internet technologies and business models. Particular focus has been given to user-created content, lightweight technology, service-based access and shared revenue models. Technologies rated by Gartner as having transformational, high or moderate impact include: Social Network Analysis, Marsh-ups, AJAX and Collective Intelligence. Web 2.0 and it’s concepts and technologies are now at it’s peak of the Hype and will be adopted within 2 years (Gartner 2006).

Appendix 2. The Gartner Hype Cycle for Emerging Technologies 2006

Figure 3. The Gartner Hype Cycle for Emerging Technologies 2006* (Gartner 2006)

*The “Hype Cycle for Emerging Technologies, 2006” report is one of 78 hype cycles released by Gartner in 2006. More than 1,900 information technologies and trends across more than 75 industries, technology markets, and topics are evaluated by more than 300 Gartner analysts in the most comprehensive assessment of technology maturity in the IT industry. Gartner's hype cycles assess the maturity, impact and adoption speed of hundreds of technologies across a broad range of technology, application and industry areas. It highlights the progression of an emerging technology from market over enthusiasm through a period of disillusionment to an eventual understanding of the technology's relevance and role in a market or domain (Gartner 2006).

The scarce e-business theory on value creation, the increasing use and importance of the Internet, and the emergence of Web 2.0 ask for a close look at features of the New Internet and it’s underlying value drivers.

With this research a contribution to value creation theories and business model theories in the field of a combination of entrepreneurship and strategic management is delivered. This research does not only contains value drivers derived from Strategy theories, e.g. Strategic Network Theory (Dyer 1998), but also focuses on Innovation and Entrepreneurship theories, e.g. Schumpeter’s theory of creative destruction (Schumpeter 1942). This research also contributes to the scarce theories of e-businesses by looking at new developments within the Internet, particularly Web 2.0.
Research on e-Business Value drivers are useful but probably not up-to-date anymore with the emergence of Web 2.0. The research of Amit and Zott (Amit 2001) for instance deals with companies before the Internet bubble of 2001. With Web 2.0 new features of the Internet transactions and participations are taking place. More and different stakeholders add value in e-business. This raises questions which (new) value drivers we can find in Web 2.0 and which ones are more important. By looking at these factors we are indirectly looking at the business models that are important in the New Internet. Providing more insight in value drivers and business models in Web 2.0 enables companies and entrepreneurs to adopt and prepare to take advantage of opportunities in this next stage of the Internet.

Amit, R. a. Z., C. (2001). "Value Creation in E-Business." Strategic Management Journal 22: 493-520.

Brynjolfsson, E. and B. Kahin (2002). Understanding the Digital Economy: Data, Tools and Research. Cambridge, MA, The MIT Press.

Dyer, J., Singh, H. (1998). "The relational view: cooperative strategy and sources of interorganizational competitive advantage." Academy of Management Review 23: 660-679.

Gartner (2006). Hype Cycle for Emerging Technology 2006.

Martin, L. and H. Matlay (2003). "Innovative use of the Internet in established small firms: The impact of Knowledge Management and Organisational learning in accessing new opportunities." Qualitative Market Research 6(1): 18-26.

Matlay, H. (2003a). Small Tourism Firms in e-Europe: Definitional, Conceptual and Contextual Considerations. in R. Thomas Small firms in Tourism: International perspectives. Oxford, Pegamon: 297-312.

Matlay, H. (2003b). "e-Babel: in Search of a Theory of e-Everything."

Matlay, H. and M. Addis (2003). "The value of E-Commerce for high growth SME's."

Schumpeter, J. (1942). Capitalism, Socialism, and Democracy. New York, Harper.

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